Government may up requested penalty in BOA fraud case

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The government has said it intends to increase the penalties its requesting against the only individual found liable in last year’s Bank of America fraud case.

Assistant U.S. Attorney Pierre Armand told U.S. District Judge Jed Rakoff that the government could seek up to $1.6 million from former Countrywide executive Rebecca Mairone, according to a Wall Street Journal report. Mairone was found liable last year, along with Bank of America, for fraud in the sale of shoddy loans to Fannie Mae and Freddie Mac by Countrywide, which BOA acquired in 2008.

The government announced its intention to request a stiffer penalty after it was revealed that Mairone received a $487,000 bonus from her current employer, JPMorgan Chase, for work performed last year, the Journal reported.

“Ms. Mairone played a central role” in the fraud, Armand told the judge. “She approved virtually every decision. … The penalty here needs to be severe enough to deter” other executives.

Mairone’s attorney, Mark Mukasey, on the other hand, said she shouldn’t have to pay anything because of the “vilification” she suffered after being found liable for fraud. Mukasey also said Mairone didn’t have sufficient liquid assets to pay the penalty and would have to cash in her 401(k), the Journal reported.

Rakoff, however, raised doubts about Mukasey’s contention that Mairone shouldn’t have to pay a penalty simply because her reputation suffered after she was found liable for massive fraud. That was “a difficult argument for the court to accept,” the judge said.